Investment diversion is considered an obstacle to economic growth because:
a. it would be better to increase the mortality rate of the country, and thus have a higher per capita real GDP.
b. investment in health care is highly appreciated by the international community.
c. capital infrastructure automatically eliminates population problems.
d. the investments in health care affect only the poorest, the least productive inhabitants of a country.
e. there is no way for a country to build its industries without an increase in investment on infrastructure.
Question 2Goods that are heavily taxed, such as alcohol and cigarettes, often have:
a. relatively inelastic demand, such that the tax burden falls primarily on sellers and the deadweight loss associated with the tax is smaller than if demand were elastic.
b. relatively elastic demand, such that the tax burden falls primarily on sellers and the deadweight loss associated with the tax is smaller than if demand were inelastic.
c. relatively inelastic demand, such that the tax burden falls primarily on buyers and the deadweight loss associated with the tax is smaller than if demand were elastic.
d. relatively elastic demand, such that the tax burden falls primarily on buyers and the deadweight loss associated with the tax is smaller than if demand were inelastic.
Question 3The Phillips curve relationship can also be seen indirectly from the AD/AS model.
a. True
b. False
Indicate whether the statement is true or false
Question 4Which of the following refers to a shift in government spending from the country's infrastructure to education and health care?
a. Capital shallowing
b. Expropriation
c. Liberalization
d. Investment diversion
e. Import substitution
Question 5Other things being equal, the more elastic demand is:
a. the lower the deadweight loss is resulting from the imposition of a particular tax on a product.
b. the greater the deadweight loss is resulting from the imposition of a particular tax on a product.
c. the greater the fraction is of the burden of the tax borne by consumers.
d. the greater the tax revenue collected by the government is.
Question 6Some economists believe that inflation could actually help reduce unemployment in the short-run.
a. True
b. False
Indicate whether the statement is true or false
Question 7Rapid population growth leads to age dependency which refers to:
a. a reduction in the amount of capital per worker, which lowers the productivity of labor.
b. shifts in government expenditures from the country's infrastructure to education and health care.
c. a large number of dependent children whose consumption requirements lower the ability of the economy to save.
d. high mortality rates of middle-aged workers that reduces the average amount of investment spending.
e. survival of the elderly who are dependent on government welfare support.
Question 8Other things being equal, the less elastic demand is:
a. the lower the deadweight loss is resulting from the imposition of a given tax on a product.
b. the greater the burden is of the tax borne by consumers.
c. the greater the tax revenue collected by the government is.
d. all of the above
Question 9To what extent should monetary policy be used to fine-tune the economy?
Question 10If rapid population growth reduces the amount of capital per worker, thereby lowering labor productivity, it is referred to as:
a. age dependency.
b. capital budgeting.
c. investment diversion.
d. capital disinvestment.
e. capital shallowing.
Question 11A deadweight loss occurs as a result of a per-unit tax because:
a. the government spends tax dollars less efficiently than do private citizens.
b. there is a decline in output for units for which the marginal benefit exceeds the marginal cost.
c. taxes cause an overproduction of output relative to the socially efficient level or production.
d. a surplus is created.
Question 12Why is the time lag for making fiscal policy changes longer than for making monetary policy changes?
Question 13Less-developed countries are experiencing rapid population growth because _____.
a. birthrates are rising at a slower rate than mortality rates
b. birthrates are falling while mortality rates are rising
c. both birthrates and mortality rates are falling
d. birthrates are rising while mortality rates are falling
e. birthrates are constant and mortality rates are rising
Question 14The net loss to society from a tax on a product can be measured as:
a. the loss in consumer surplus.
b. the loss in producer surplus.
c. the loss in both consumer and producer surplus.
d. the difference between the loss in consumer and producer surplus and the gain in tax revenue.
Quick Reply
